C-Store Update - Copenhagen Long Cut Wintergreen, another new Marlboro coming..

November 12, 2009

Copenhagen long cut, wintergreen moist snuff is now available for sale. This premium moist snuff is selling for $2.19 a can.

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Conwood's Grizzly a value priced/discount brand not to be outdone lowered their price $1.59 per can.

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Some background: Altria Group Inc said on Tuesday, January 6, 2009 it completed its $10.4 billion acquisition of UST, Inc. greatly expanding Altria's presence in the faster-growing smokeless tobacco segment. Michael E. Szymanczyk - Chairman and Chief Executive Officer at Altria has indicated a little tweaking is necessary for the UST's premium brands - Copenhagen and Skoal to return these brands to some modest share growth. (Altria Group, Inc. Agrees to Acquire UST Inc. - Altria Group and UST Conference Call, Seeking Alpha, 9/10/2008.)

Ten years ago, UST owned more than 80% of the smokeless tobacco market. By late 2004, the company's market share had slipped to 68%. Today, it's less than 60% and trending down.

Grizzly, the nations number one moist snuff brand, in the second quarter 2009 expanded its market share to 25.5 percent, up 2.2 percentage points, according to data from Management Science Associates Inc., a research group. Conwood's overall market share was up 1.9 percent to 29.4 percent. By far the best selling type of Grizzly is the long cut wintergreen. Skoal already has this type of moist snuff but Copenhagen does not. The new product could drive Copenhagen's share of the segment from 23% to 32%, according to an Altria spokesperson.

Philip Morris Tobacco (PM USA) will be introducing in January 2010 Marlboro Special Blend. Here's their reasoning: Marlboro is the #1 cigarette brand in the country, non-menthol cigarettes represent the largest segment of the cigarette category and 16 percent of adult smokers age 21-64 say they always look around to see if there's anything new from their regular brand when shopping for their cigarettes.

From what we hear: one blend will have mellow taste and the other a more robust taste. We wonder if Philip Morris submitted the necessary documentation for this new product to the FDA's Tobacco Product Center for their approval.

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